August 5, 1997 /FOOLWIRE/ -- Rainforest Cafe reported their second
quarter earnings today for the thirteen weeks ended June 29, 1997. Revenues
rose 234% to $23.6 million from $7.1 million in the first fiscal quarter
of 1996. Net income more than tripled to $2,955,000 from $833,000. On a per
share basis the company earned $0.17 a share vs. $0.06 the year before.

STRONG SALES AT DISNEY. The company's largest unit, which opened last
summer at Walt Disney World, reported sales of $9 million over those thirteen
weeks. Revenues at the volcano-enclosed eatery have improved every quarter
and CFO Mark Robinow sees an improving trend for the unit to surpass the
$32.9 million the location rung up in its inaugural year.

ERRATIC RESULTS AT OLDER UNITS. While the original Mall of America
location continues to improve their sales, up 4% for the quarter, the same
cannot be said for the two Chicago units. Woodfield same store sales are
down 11%. Gurnee opened last June but the comps for those weeks were off
by 18%. The company explained that this is a natural occurence at theme
restaurants where there is usually a drop-off after the initial "honeymoon"
period. In July Gurnee had improved to just a 12% decline.

The company noted that despite the soft Chicago comps even those units are
still exhibiting strong profitability and attractive unit economics.

MARGINS ARE IMPROVING. The units reported healthy 21% operating margins
before pre-opening expenses due to improvements in many expense categories.
Food and beverage costs were lower for three reasons: poultry prices were
locked-in at a low rate, South Coast Plaza opened with much lower food costs
than expected and the Disney unit had strong high-margin catering business
for the quarter.

Retail margins were also strong as international sourcing helped reduce the
cost of those sales.

The company expected margins to stay at 21%, possibly dipping to 20% in the
fourth quarter as the company absorbs 5-6 openings that period, then resuming
its 21% course by the first quarter in 1998.

SEARCH FOR PRESIDENT AND COO CONTINUES. Since Martin O'Dowd's departure
three months ago the company has been looking for a successor. The company's
only comment was that they were still in the hiring process and interviewing
qualified applicants.

DEVELOPMENT SCHEDULE ON TRACK. "We are often at risk to the developers
schedule," interim President Ken Brimmer noted when discussing the future
unit at Palisades Center. Mall developer woes had threatened to slow down
construction but those have since been resolved and yesterday the company
got the green light to begin building and they expect a December 1st opening.

Along with the Palisades site there are seven domestic locations slated to
open before the end of the year. The Source, at Long Island, New York, will
open a month from today. By the end of the current quarter the third Chicagoland
location, this one in the heavily travelled Downtown district, should be
ready to open. Grapevine Mills in Texas, Arizona Mills near Tempe, Aventura
Mall in Miami and MGM Grand in Las Vegas should all have fourth quarter openings
completed by early December.

The company is projecting eight 1998 openings stateside and announced two
new locations. Garden State Plaza in New Jersey and Ontario Mills in California
joined Denver's Cherry Creek, Detroit's Great Lakes Crossing and the icon
unit at the entrance of Disney's Animal Kingdom to fill out five of those
eight slots.

The Animal Kingdom unit will have a soft opening a month before the actual
park debut. As Disney's fourth gated attraction the company is excited to
be the only sit-down restaurant in what will be Disney's largest park, in
terms of acreage.

In continuation of their strong relationship with Disney they already have
established the "framework" for a unit at Anaheim's Disneyland in 1999 or
2000.

NEW INTERNATIONAL DEVELOPMENTS. The first licensed Rainforest Cafe
opened in London on June 24. While sales were flat the first three weeks
the last two weeks have been "up nicely". Next week a small 200-seat unit
will open in Cancun, Mexico. Another ECE-franchised Rainforest Cafe will
open in the fourth quarter in Mexico City at the Grupo Santa Fe Mall. Canada
and Hong Kong will chime in with their first units next year.

A new deal was announced with Far East Holdings that would develop a minimum
of five units in Asia over the next ten years. The first one may open next
year in the company's home country of Singapore.

Q&A. Asked about the rise in General & Administrative Expenses the
company noted that they have already hired all seven of the Directors of
Operations for the remaining 1997 units, as well as the head of the Animal
Kingdom restaurant, and those are expensed at the G&A level until their
respective units open.

While the G&A costs also rose as part of building corporate infrastructure
the company hopes to have those down to a 5.5% run-rate of total revenues
by the end of the year and eventually sub-5%.

In an effort to drum up sales at the slow Chicago units they have hired someone
to look into exploiting the corporate catering business that has proven so
lucrative at Disney World. A recent buyout at the Disney RAIN, where 3000
travel agents rented out the restaurant for a private party, produced a tab
north of $100,000 for the night.

When asked by a Foolish attendee about unannounced sites at 4 Times Square
and Concord Mills in North Carolina the company said that a lease for a unit
at the 48 story building being erected at 4 Times Square has not been finalized
and the company is pursuing two other locations in the area in the meantime.
They did note they did sign a letter of intent for a location at Concord
Mills, a new mall projected to open in the third quarter of 1997.

The balance sheet remains strong, with $143 million, or $8 a share in cash,
and no debt. Net capital expenditures are estimated at $45-$50 million next
year, as was the case this year, so capital should not be a problem going
forward.

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